The Annual General Meeting of Pernod Ricard held on November 6, 2014 offered shareholders an opportunity to send a message to the Board by rejecting the Resolution 14 authorising the granting of stock options to executives.

Indeed, the resolution stated that the call of these stock options was conditional on the achievement of performance conditions assessed on a minimum of three years (as demanded by the ECGS voting policy) and subject to several performance conditions.

Proxinvest, the French partner of ECGS, wrote in his report that "the duration of the performance criteria is acceptable and it is significant that as demanded by Proxinvest, “the company will now compares itself to its sector peers rather than to the CAC 40 index. However, as the options could be exercised even in the case of underperformance compared beverages index of its industry, Proxinvest could not recommend approving the resolution. "

The resolution received only 63.97% of YES votes, i.e. less than two-thirds required by law for approval of extraordinary resolutions.

Note that everything had been done to facilitate the granting of stock options to the Chairman & CEO, Pierre Pringuet, and to the future CEO, Alexandre Ricard, as the Ricard family overweight’s the general meeting thanks to the "mechanism of double voting" subject to the holding of the shares on a registered account for no less than 10 years while most shareholders are not willing to accept the administrative burden and exorbitant bank charges needed to block the shares for a minimum of ten years.

As a result. with only 13.14% of the capital, the family represents 25% of participants in the AG voice. Despite this, the wave of discontent was too strong among minority holders and the Board only has to review its copy.

Should the beneficiary and company chairman Pierre Pringuet be blamed for not respecting his own reference AFEP-Medef code while he chairs AFEP, the private companies association? No, because the AFEP-MEDEF code in the paragraph 23.2.4 forgot to mention that such performance conditions should be challenging and that the grant should not be given in situations of underperformance. Our reference code writers tend to be distracted.

»

Social Networks

Order ECGS reports

You can purchase online the proxy reports drafted by Expert Corporate Governance Service for its clients over the top 500 European companies.

To subscribe to a large universe, please contact Loïc Dessaint, CEO of the managing partner ECGS : ldessaint@ecgs.com

Good corporate governance equals shareholder value

ECGS is a joint venture of independent local market experts which have come together to provide specialist governance assessments and informed proxy voting advice, offering institutions access to unrivalled experience on corporate governance and responsible investment issues.